SWITZERLAND Law and Practice Contributed by: Natalie Dini and Peter Vogt, Tax Partner AG
2.5 Transfer of Property Movable Assets
donor stay in the house, while the recipient’s gift- tax base is discounted. • Life-insurance: Pure-risk policies paid out on death are exempt from cantonal inheritance/gift tax and from income tax for the heirs. • Foreign trust structures: trusts can be used for asset protection and in certain cases also for tax planning. The exact tax treatment depends on many factors such as the residence of the settlor upon settlement, their degree of control, and the influence of beneficiaries. • Swiss family-support foundation: These founda - tions can hold assets for a child’s education/care outside the parents’ estate; they are taxed as a company and their use is narrowly restricted, so they are employed only for very specific needs. • Foreign family foundation: similar to foreign trust structures, foreign family foundations can – depending on circumstances and proper plan - ning – be used to transfer assets to the next generation(s) while mitigating tax exposure. 2.7 Transfer of Assets: Digital Assets Switzerland follows the principle of universal succes - sion: at death, heirs automatically step into all trans - ferable rights and obligations, including crypto-wal - lets, domain names, cloud storage, etc. Swiss heirs inherit digital assets just like bank accounts, but they need the practical means (keys, passwords, provider consent) to reach them. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities The following structures are often used for tax and estate planning. Swiss Charitable Foundations These are typically used for long-term family philan - thropy, corporate social-investment vehicles, dedicat - ed scholarship or research funds, and art and cultural endowments. Their purpose must serve the common good in Switzerland (eg, education, science, culture, the environment or humanitarian aid). Once recog - nised as exclusively and irrevocably charitable, the
For an individual, Switzerland does not tax private capital gains on movable, privately held assets (shares, art, crypto, etc), so a gift or inheritance does not lead to a “step-up”. The donee simply takes over the donor’s historic tax values. Real Estate Each canton charges a real estate capital gains tax when a property is sold. If the property is transferred gratuitously (eg, as an inheritance, gift or advance on an heir’s portion), the cantons in general grant a tax deferral. The recipient inherits the donor’s original cost basis and holding period. The latent gain is merely postponed and will be taxed when the heir or donee Neither death nor an intra-family gift creates an auto - matic revaluation of business assets within a com - pany; hidden reserves remain untaxed until realised. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms eventually sells. Business Assets The main tax exempt (or tax-deferred) paths Swiss families use to shift wealth down a generation consist of the following options, which each require thorough planning. • Gifts or inheritances to descendants: In 23 of 26 cantons, transfers to children and other direct heirs are fully exempt from gift/inheritance tax. Early gift - ing therefore remains the single cheapest route. • Move the donor to a zero-tax canton first: Obwal - den and Schwyz (and Lucerne for gifts) have abol - ished these taxes entirely; a change of domicile before the gift/death can therefore lead to a zero tax burden. • Gift Swiss real estate with cost-basis carry-over: A lifetime transfer (or an advance on an heir’s por - tion) of property to children usually triggers no real estate capital gains tax today; the latent gain is merely rolled over to the next sale. • Bare-ownership gift and retained usufruct: Parents give the legal title now but keep the lifetime use/ rent; the usufruct blocks any gains tax and lets the
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